Broadway conference: Travel firms urged to demand reduced Atol charges

Broadway conference: Travel firms urged to demand reduced Atol charges

Travel firms should be demanding reduced Atol bonding and £2.50 APC charge next year as new EU rules prevent charges for credit card bookings.

Chris Photi, senior partner and accountancy firm White Hart Associates, told the Broadway Travel Group conference in Rhodes to expect a significant increase in credit card use.

He cited one unnamed client which ditched card payment charges in September and has seen credit card bookings increase from 14% to 50%.

Photi said the PSD2, that comes into force on January 13, will mean more customers will use credit cards and therefore be financially protected under the consumer credit act.

In the event of a failure, as seen most recently with Monarch, the CAA and Abta advises consumers with potential claims to approach their credit card issuer as their first port of call.

Photi said under the current financial protection arrangements holidaymakers are often double or even triple protected which means when a failure happens liability is passed around.

“Will increased credit card use lead to a reduction of Atol protection? You should be shouting this from the roof tops as far as regulators and trade associations are concerned.

“This change is massive. I’m not hearing that bonding is going to be reduced or the APC is going to be reduced in January. You should be asking why not,” Photi said.

Only firms under four years old or those deemed financially weak are required to bond by the CAA. All others with Atols must pay the £2.50 per person Atol Protection Contribution that has helped build up a £145 million Atol trust fund.

Photi said the only way to comply with PSD2 was to add a service charge or to increase prices to cover the costs of transacting payments that card issuers pass on to travel firms.

He described 2018 as ‘the year of compliance’ with a slew of new regulations due to come in for travel firms.

“In all my years advising the travel industry I have never a year where you have seen so much compliance on the table for businesses to have to implement,” Photi said.

As well as stricter EU laws on the use of customer data the revised Package Travel Directive is due to be enacted into UK law on July 1. That will see agents take on greater responsibilities.

Photi said any company currently selling flight-plus holidays will have to accept the same liabilities as full package providers do today.

“Be in no doubt, if you are selling flight-plus it will be a package even if you are and agent for the component suppliers.

“The biggest problem for you is liabilities are now extended to you and are formally in your court.

“You have to pay full refund or make alternative arrangements if the holiday is significantly altered pre-departure and falls short of what they booked.

“It maybe your supplier who alters those arrangements, but you are stuck with the bill.”

Photi advised travel firms to review their agreements with suppliers to make sure in the event of a problem that is the supplier’s fault they can recoup the cost of putting it right.

He described a new form of travel booking in the revised PTD known as Linked Travel Arrangements (LTAs) as a “legal morass” which nobody can explain.

LTAs are travel products bought from different linked websites but where passengers details are  not passed between them.

They do not require firms to provide full package protection but they should provide financial protection.

“There is immense confusion around this,” Photi said. “How are you going to know if one website passes a link to another that the customer booked or not?”

Photi said already other EU member states like Germany are arguing LTAs get firms out of PTD responsibilities and obligations altogether. “Watch this space,” he said.

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